As steel rises at the site of the San Francisco 49ers’ new Santa Clara Stadium, the project looks more and more like the team’s legendary 1984 season: pretty much unstoppable.

But it was no easy trot to the end zone for the $1.2 billion facility. Multiple lawsuits, a referendum and funding challenges all threatened to derail the project, or at least hold it up.

The most recent came when a Santa Clara County oversight board unexpectedly yanked $30 million in former redevelopment agency funds, sparking a lawsuit by the 49ers.

“Ultimately, we were able to resolve it through negotiations,” Santa Clara Mayor Jamie Matthews said, alluding to a compromise that will share the funds among the 49ers and local public agencies. “Every time we came up to a roadblock – and there were a lot of roadblocks along the way – we found a way to go around it,” Matthews said.

That’s exemplified by negotiations on the financial terms, which nailed down costs, team and city contributions, and a business plan that would pay back lenders and safeguard taxpayers.

“A number of cities have been caught on the wrong side of these deals and have paid dearly with their general funds,” said Matthews, also chair of the Santa Clara Stadium Authority, an agency separate from the city established to develop and operate the stadium.

Santa Clara was determined to avoid that fate. So from the start, officials required that the project not impact the city’s general fund. It wasn’t the most common arrangement, said Larry MacNeil, the team’s chief financial officer who was involved in negotiations.

“Typically, a stadium deal is financed by using the full faith and credit of a local municipality,” MacNeil said. “All of those were off limits. That was the hardest structural thing to come up with.”

But not impossible. Both sides met for 2 ½ years to hash out the initial “term sheet,” laying out the framework for the deal before it was approved in June 2009, said Ron Garratt, Santa Clara interim city manager. Garratt led the city’s interactions with the 49ers under former city manager Jennifer Sparacino, who retired in June.

“I can’t tell you how many hours we put in, but there were a lot of 80-hour, 90-hour workweeks for a period of time,” he said.

Matthews recalled meetings – some of which took place in a secure police administration building and featured late-night pizza runs – to iron out sticking points such as rent and parking and simply understand the complex details.

He said both sides had to get creative to make the project pencil out – and, critically, attract lending.

The resulting deal, which was formalized in an agreement approved in December 2011, proposed blending multiple funding sources. Stadium revenue from naming rights, seat purchases and non-football events would bring in hundreds of millions, according to estimates.

In addition, nearby hotels supported the effort with $35 million from a 2 percent hotel-room tax. The city committed $40 million from the redevelopment agency, which has since been dissolved. The team is estimated to pay $30 million to the stadium authority in rent.

Meanwhile, a complex legal structure was designed to build, own and operate the facility while protecting the city taxpayers.

The commitments convinced lenders led by Goldman Sachs to offer $850 million to construct the project, while the NFL offered its own $200 million loan.

Matthews noted the funding was even more impressive because access to capital was tightened after the financial crisis.

“The lenders could see a way that all of that money would be available to repay their construction loan,” MacNeil said.

In one early positive sign that the business plan was realistic, the team announced in September that it had sold $670 million in season tickets.

KEY MOMENTS

November 2006: 49ers announce desire to move to Santa Clara

June 2009: Santa Clara City Council approves term sheet with 49ers for new stadium

Cedar Fair lawsuits: The owner of California’s Great America tried to stop the stadium plans over a long-running parking dispute. In January, the 49ers and Cedar Fair came to an agreement on parking and other concessions.

Redevelopment agencies cut: When Gov. Jerry Brown announced plans to close city redevelopment agencies in 2011, it threw $40 million in stadium funds in doubt. In June, a Santa Clara County oversight board seized $30 million of the funding, with some members saying the money would be better spent on schools. After the 49ers sued the board, both sides compromised and shared the funding.

Referendum: Voters green lighted the project by approving 2010’s Measure J. But a citizen’s group opposed to the stadium, Santa Clara Plays Fair, tried putting a referendum on the ballot. The Santa Clara Stadium Authority sued in January to stop the action.

Finding Parking: The 68,500-seat stadium eats up a lot of parking. About 21,000 parking spaces are needed on game days. Publicly owned land can provide 10,000. To find the rest, officials approached surrounding businesses. Participating businesses will reap a financial reward for allowing parking. Terms are still being worked out.

Industries:

Comments

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.